Strategic production modeling for defective items with imperfect inspection process, rework, and sales return under two-level trade credit

Abstract

Quality decisions are one of the major decisions in inventory management. It affects customer's demand, loyalty and customer satisfaction and also inventory costs. Every manufacturing process is inherent to have some chance causes of variation which may lead to some defectives in the lot. So, in order to cater the customers with faultless products, an inspection process is inevitable, which may also be prone to errors. Thus for an operations manager, maintaining the quality of the lot and the screening process becomes a challenging task, when his objective is to determine the optimal order quantity for the inventory system. Besides these operational tasks, the goal is also to increase the customer base which eventually leads to higher profits. So, as a promotional tool, trade credit is being offered by both the retailer and supplier to their respective customers to encourage more frequent and higher volume purchases. Thus taking into account of these facts, a strategic production model is formulated here to study the combined effects of imperfect quality items, faulty inspection process, rework process, sales return under two level trade credit. The present study is a general framework for many articles and classical EPQ model. An analytical method is employed which jointly optimizes the retailer's credit period and order quantity, so as to maximize the expected total profit per unit time. To study the behavior and application of the model, a numerical example has been cited and a comprehensive sensitivity analysis has been performed. The model can be widely applicable in manufacturing industries like textile, footwear, plastics, electronics, furniture etc.

Supply Chain with Customer-Based Two-Level Credit Policies under an Imperfect Quality Environment

“…This has been realized by many researchers, as they have collaborated imperfect quality, the screening process, and one/two-stage trade credit policies in their work. Some of the important contributions in this field are those of Zhou et al [40], Khanra et al [41], Khanna et al [42], Palanivel and Uthayakumar [43], Taleizadeh et al [44], and Khanna et al [45]. None of the previous studies that worked on trade credit along with imperfect quality, imperfect inspection, and shortages had presumed the dual bifurcation of customers, i.e., firstly into old and new types (on the basis of past records), and secondly, the new ones into good and bad types (on the basis of partial payment fulfillment) at the whole seller's end, in a three-echelon supply chain.…”

Satisfying multiproduct demand with a FPR-based inventory system featuring expedited rate and scraps

“…Other research focused on diverse imperfect features of manufacturing systems can also be found (e.g. Makis, 1998;Eroglu & Ozdemir, 2007;Chakraborty et al, 2013;Kaylani et al, 2016;Majumder et al, 2016;Zhang et al, 2016;Khanna et al, 2017;Rezazadeh & Khiali-Miab, 2017;Shakoor et al, 2017;Al-Bahkali & Abbas, 2018;Pearce et al, 2018). Because few studies focuse on multiproduct fabrication system by considering an expedited rate and scraps, this research aims to fill the gap.…”

Joint effects of stochastic machine failure, backorder of permissible shortage, rework, and scrap on stock replenishing decision

“…Solution and performance of these algorithms (including CPU time) were confirmed and assessed via two-sample t-tests to demonstrate their accuracy and efficiency. Diverse aspects of fabrication systems by considering defective items and/or their quality improvement issues were also explored elsewhere (Abilash & Sivapragash, 2016;Balaji et al, 2016;Chiu et al, 2016;Jawla & Singh, 2016;Mičieta et al, 2016;Buckova et al, 2017;Chiu et al, 2017a,b;Khanna et al, 2017).…”